Friday, August 3, 2012
America 2050. What Will We Build? Part 3.
I am an historian, not a psychic. America in 2050 is just a nice round date. I believe that our destiny lies reliably in the past. If you want to know where we're going, we have to look at where we (and Western Europe) have been.
The US economy is going through massive change. Manufacturing is no longer the province of the US as it was following WWII, when the US made products for a world looking to rebuild. We were owed by the world, and the US dollar's power and value was unquestioned. "Sound as a Dollar," was a common saying, and the speakers did so without the hint of a sarcastic smirk on their face.
In 2012 America unemployment is high, indeed, much higher than the US government manipulated low ball numbers of 9 or so percent. These number don't count those who've lost their unemployment benefits, who've given up after years of futile job searches, and the massive amount of underemployed. Yes, a job as a Walmart associate counts as a job at $22,000 per year. But it can't hope to replace the income that this now overqualified person earned at his previous employer. Cases of people accepting jobs at tiny fractions of their previous salaries are now commonplace. In these cases, despite the Obama Administration's claims, do not a true recovery make. Our Walmart worker has a job, but he's not buying the goods and services he once could afford. If he's lucky he's scraping by paycheck to paycheck, and not falling back on credit cards and other loans to make ends meet.
Today's America makes virtually nothing it consumes. Our economy is 4 times larger than Germany's, but Germany's share of global merchandise exports is actually higher than America's (9 percent vs. 8.5 percent) in 2009! The other key measure -- little known in popular discussions of manufacturing -- is export intensity, the ratio of a nation's exports to its total manufacturing sales. The global average export intensity is twice as high as that of the United States, which ranked 13th out of the 15 largest manufacturing countries in 2009, higher only than Russia and Brazil. Meanwhile, the leading EU countries had export intensities 2.5 times to 4 times higher than America's. Comparisons of the value of manufactured exports on a per capita basis are even more dramatic: they are higher in Spain ($3,700), Japan ($4,000), Canada ($4,600), and Germany ($11,200) than in the United States ($2,400).
China has become our merchant of choice. In fact, Walmart, the largest retailer in America, claims that 70% of all products they sell as made in China. As a result, China has now become the supplier of cheap manufactured goods to the US. In exchange we give them paper fiat dollars that are backed by nothing other than the "Good Faith and Credit of the USA". In the past they held those dollars in Chinese banks, effectively giving us their products for free. However, rumors abound now that they are quietly spending their hoard of paper dollars on natural resources, gold and silver, mines, real state - anything to divest themselves of a rapidly depreciating piece of green paper. The resulting dollars are dumped back into the US money supply, fueling inflation through basic supply/demand economics.
Of course, in this process the US surrendered it's status as the lender to the world to the largest debtor nation on Earth. We also dismantled the manufacturing base that won WWII and offered a middle class existenance to millions, in exchange for cheap coffee makers!
America 2050 - Economy
It's hard to find a precedent in the past for a nation that has risen as high and fallen as low as the USA must by 2050. I could look at the 18th and 19th English Empire and the shrunken corpse remaining after WWII, and get an weak idea of what the future may hold for America. Once the sun never set on the English Empire. They ruled the seas and were a commanding presence in any world political event. Today they are at best a third rate power excluded from the councils of the powerful. Their economy putters on, but growth of all kinds, population and economic remains static. Like Egypt, they find themselves eternally looking to the past for their source of glory. The USA will likely be in a similar, if not much worse state, in 2050. After all, the America Empire was the largest to date in power, wealth, and prestige, if not landmass. It's only reasonable to assume that her fall would break records as well.
The erosion of the middle class is likely to continue. Jobs working as a barista at Starbucks, or a retail clerk, will never pay the wages to build a middle class existence as heavy manfacturing once provided in post WWII America. Multigenerational family living will replace the nuclear family ideal, and renters will overwhelm buyers as the most economically feasible option. America of 2050 will resemble pre-WWII US infintely more closely than the post war boom version!
Already China is showing its economic, military, and political power around the globe. They're providing Europe with loan guarantees, buying mines and resources in South America and Asia, and pointedly warning American warships to behave themselves in the Taiwanese Straits. It appears we even need them for space exploration, as the Obama Administration announced that they need Chinese help to send a manned mission to Mars!
China is certainly a shoe-in for the next world Superpower. Other Asian nations such as India are sure to gain ascendance as well. America will confine itself to our shores and coastlines, and do our level best to avoid angering our Asian friends. Maintaining a bloated military policing the world is very, very expensive. By 2050, such an extravagance will seem an absurd to a struggling once-great power. Perhaps out of the profound darkness everywhere else, this anti-imperial reality will supply a renewed glimmer of hope that one day the descendants of the Founding Fathers may indeed create the 'City on a Hill' once envisioned by our Founding Fathers! A country that spreads its light by a silent, shining example, not through the miltary interventionist policies that have sought to control the world, but instead has only bankrupted our country!